I have some knowledge re the stadium & AFL policies re the kids free admission on Sundays and it is a little complex.
a) For kids to get in free, technically, they still require a ticket which can be obtained from the ticket window at no cost.
b) free entry applies to general admission areas only (which at Etihad is always on level 3, for our home games that's towards the back rows on the wings & from memory, behind row F or thereabouts behind the goals at either end). In your case, to sit on level one, a reserved seat would be required for each patron wishing to occupy a seat in that area, hence, the fee you paid.
c) if you sit in a reserved seating area, ie not in GA, your child could technically still access the stadium for free but not occupy their own seat in that reserved area, in other words, they must sit on your lap.